The Australian share market closed moderately weaker, dragged down by materials stocks as investors digested lower base metals prices and the West Australian government's iron ore royalty hike. The benchmark S&P/ASX200 index was down 24.2 points or 0.51 per cent at 4732.2 points, while the broader All Ordinaries index was down 20.5 points or 0.42 per cent at 4,807.2. Despite the fall on Friday, the market was still up for the week by around half a per cent. On the ASX 24, the June share price index futures contract was off 17 points at 4743, with 23,993 contracts traded.

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Market heavyweights BHP Billiton and Rio Tinto helped dragged the local bourse lower following lower oil and base metals prices overnight. The WA government's proposal to increase the fines royalty rate for some types of iron ore to 6.5 per cent also weighed on materials stocks. BHP Billiton lost 77 cents, or 1.72 per cent, to $44.05, and Rio Tinto fell 90 cents, or 1.11 per cent, to $80.20. Fortescue Metals was five cents cheaper at $6.44 after announcing a maiden iron ore reserve estimate of 716 million tonnes for the first stage of its Solomon Hub project in Western Australia. Woodside Petroleum gained 32 cents to $45.72 after global giant Royal Dutch Shell said it would go ahead with the world's first floating liquefied natural gas (LNG) project, offshore from WA.

Major gold stocks lost ground, with Newcrest giving up 30 cents to $38.47 and Kingsgate Consolidated down seven cents at $7.73. The spot price of gold in Sydney was trading at $1497.90 per fine ounce, up $2.28 from Thursday's close of $1,495.62. Banks and financials endured selling pressure although National Australia Bank bucked the trend, firming one cent to $27.41. Westpac was down 15 cents at $22.75, Commonwealth Bank was off 21 cents at $52.17 and ANZ was down 19 cents at $22.79. Among the retailers, Myer Holdings dropped six cents, or 2.03 per cent, to $2.89 and Harvey Norman down four cents, or 1.57 per cent, at $2.50. Telstra eased one cent to $3.04. The telco giant has been gaining ground over the past two months as investors bought in ahead of the 14 cent dividend payment.

Fairfax Media closed two cents lower at $1.09 after Macquarie Radio Network Ltd said it wanted to look at its radio assets ahead of a potential bid. In other news on Friday, Maryborough Sugar Factory Ltd said it expected a lower sugar cane crush this year as a result of bad weather. It downgraded its full year earnings guidance and its share price fell four cents to $4.02. Preliminary national turnover was 2.09 billion shares worth $4.33 billion, with 538 stocks up, 537 down and 413 unchanged.

The Australian dollar inched slightly higher in Asia trading on Friday even as bonds also gained. In a muted Asian session, much of the focus was on China and Japan. First, the Bank of Japan kept policy unchanged just a day after the country officially fell into recession. Also in the day's trading, China set the yuan notably stronger. Coupled together, the moves did little to stem a steady move higher for the Australian dollar, which reflected a positive risk tone in several asset classes. The Australian dollar was changing hands at $1.0660, up from $1.0640 late Thursday. Against the Japanese yen, the Australian dollar was at 87.135, up from 86.88.

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